Collecting Vintage Motorcycles Is More About The Machine Than The Money

Matt Hunter,|CNBC.com Editor

Published 9:54 AM ET Mon, 18 Oct 2010
CNBC.com

Vintage bike broker Somer Hooker made a good bet in the mid 1980’s. He bought a British Vincent Black Shadow motorcycle for $7,000. A year later he sold it for $27,000.

Compared to the S&P 500 over the last 10 years, a one-year return of nearly 400 percent looks pretty good. So how easy is it to make money in vintage motorcycles? Would buying, say, a 1975 Ducati 900SS be a good addition to your portfolio? (And don’t forget—it’s important if you’re an enthusiast—this is an investment you can actively enjoy. Try that with an index fund.)

Be careful, says Hooker. While it’s certainly possible to make money on a bike, don’t buy with that expectation. “It’s like buying art,” says the Tennessee-based broker. “Buy something you like because you may have to live with it.”

Certainly there are people in it for the profit as much as the pleasure, and interest in vintage or collectible motorcycles is still strong despite the recession, says Alex Lezama, an analyst at NADA Appraisal Guides, a vehicle information and appraisal company based in Costa Mesa, Calif. In fact, auctions and sales of pre-World War II motorcycles have grown in recent years.

The current economy presents a good buying opportunity for both the serious investor and the enthusiast, says Glenn Bator, owner of Bator International Auctions. Prices on collectible bikes in the $15,000 category (especially British and Japanese models) have dropped by anywhere from 10 percent to 20 percent, he says.

What makes a motorcycle collectible? Jerry Wood, an auctioneer based in Massachusetts says nostalgia plays a big role (he calls it the “25 year rule”). Baby Boomers searching for the Fountain of Youth at least partially explains the collectability and popularity of models like 1979 Honda CBXs, and 1973 Kawasakis, says Hooker. “People like to go back to what was popular when they were young,” he said.

Pre-WW II and limited-run bikes fetch the best prices in both auctions and private sales, but those are hard to come by, and expensive when they do turn up, says Lezama. “Collectors that have the good stuff are hoarding,” he says. (TV show host Jay Leno, for example, is a big buyer.)

A 1924 Indian Chief, for example—considered a classic American motorcycle brand—can, depending on the condition, run up to $45,000 at auction, says Hooker. At the recent Pebble Beach Motorcycle auction a 1923 Ace Four sold for $120,000, and a 1915 Indian 8 Valve was carted off for $137,000.

Though prewar bikes are attracting the most interest, later models can also command huge prices. Post-war, limited-production Italian bikes like Ducati, and British bikes like the Brough Superior SS100, fetch enormous sums when they are available. (At least one of the latter was sold at auction recently for $110,000, says Lezama.)

So, what do serious investors need to look for to make sure they’re not taken for a ride by a con artist?

“You need to get someone who’s knowledgeable and trustworthy to walk you through it,” says Mr. Bator. Counterfeiters are more prevalent than ever and “they’re getting much better,” he says. An experienced broker, for instance, can much more easily determine if that 1969 Honda CB750 you’re eyeing is in fact made out of refurbished parts.

Less expensive bikes also appreciate in value, just don’t expect a huge return. Motorcycles like the Honda CR 125 are more reasonably priced—you can often get one in good condition for under $6,500 – and are likely to retain their value, if not dramatically increase in price, says Lezama.

Also, check out other auctions to see what specific models are selling for, Hookers advises. Since the market is somewhat fragmented, it can be hard to determine if you’re getting the best price possible—either as a buyer or a seller. Mid America Auctions in Las Vegas, BatorAuctions in Daytona, and Bonhams Auctionare good resources, says Hooker.

Whether you make money or lose it, in the end there’s still the joy of bike ownership. “People get tired of paper assets,” says Hooker. “It’s more fun to go out in the garage and see what you’ve got.”